Latvia profile

Overview

In 2023, Latvia’s final energy consumption (FEC) totaled 3.81 Mtoe, reflecting a 1.2% decline compared to 2010. The residential sector remained the largest energy consumer, accounting for 29% of total FEC, though its share contracted by 3.9 percentage points since 2010. Similarly, the transport sector’s share edged down from 28% to 27%, while industry expanded its share from 20% to 24%. In absolute terms, household and transport energy consumption decreased by 12.9% and 5.7%, respectively, whereas industrial consumption surged by 19.1%. Due to change in the geopolitical situation in 2022 and the associated rapid increase in energy prices, significant decline in energy consumption was observed in households and service in 2023 compared to 2021.

Energy efficiency for final consumers, as measured by ODEX, improved by 32%, or 1.7% per year from 2000 to 2023. The rate of improvement slightly decreased (1.4% per year since 2010, compared to 2.0% per year over 2000–2010). In industry, despite the economic recession (2008-2011), there has been steady progress and larger gains than in the other sectors with 46% over 2000-2023 (2.7%/year). Notably, the pace of energy efficiency improvements has slowed since 2010, with the annual rate of progress averaging just 1% per year. Financial support programs and legislative measures aimed at reducing heat losses in buildings have driven significant gains in the residential sector, achieving a cumulative efficiency improvement of approximately 38% over 2000-2023 (equivalent to an average annual rate of 2.0%). In contrast, the transport and service sectors have realized more modest advancements, with annual efficiency gains of 1.3% and 0.5%, respectively, since 2000.

Estimated total energy savings from 2000 to 2023 are around 1.4 Mtoe. Household sector played major role, contributing nearly half (43%) of them. The second largest contribution is provided by industry (31%), followed by transport sector (21%). While energy savings in the residential and industrial sectors stemmed primarily from targeted energy efficiency programs, improvements in the transport sector were largely attributable to technological progress, with support programs playing a more limited role. Rapid increase in energy prices in 2022 significantly affected consumer behaviours. Energy savings in household and services increased by respectively 12.1% and 9% compared to 2021.

Between 2010 and 2023 primary energy consumption of Latvia decreased by 0.29 Mtoe (6%), from 4.51 to 4.22 Mtoe. The decrease in final demand (-0.24 Mtoe) had the most significant impact on these changes. Lower consumption in the power sector mainly due to introduction of the efficient CHP technologies and lesser extent switching to renewable energy sources accounted for a decrease of 0.1 Mtoe. Compared to these effects, the contributions from energy use in other transformational changes and non-energy use were relatively small.

During the period 2010-2023, total final energy consumption in Latvia increased by almost 0.24 Mtoe (from 4.0 to 3.76 Mtoe). The economic activity and structural changes contributed to a total increase of final energy consumption by around 1.07 Mtoe, with the activity effect being the main driver. These were, however, compensated by the energy savings achieved through a considerable improvement in energy efficiency (-0.66 Mtoe) as measured by the ODEX and the weather fluctuations -0.24 Mtoe. The decrease in energy consumption was also influenced by other factors, such as a changes in behavior due to the rapid increase in energy prices in 2022. A similar factor also influenced the decrease in energy consumption in public buildings.

Energy efficiency improvement is one of the top priorities of national energy sector development which allows for the cost-effective reduction of risks associated with security of energy supply, provides sustainability, competitiveness and growth of national economy, in line with GHG emissions mitigation. Mix of instruments are used for energy efficiency policy implementation. Co-financing of energy efficiency investments (see sectorial Tables) and obligation to implement energy management systems (EMS) should be particularly underlined. Table below presents EMS implementation by large enterprises and large electricity consumers, for EMS in public bodies see the Buildings section. Latvia’s Updated NECP2030 places significant emphasis on strengthening the role of public bodies, mandating energy consumption monitoring and reduction measures while positioning them as models of energy efficiency. In line with Article 5 of the new EED 2023/1791/EU, the mandatory target will be set - - final energy consumption reduction of all public bodies combined by at least 1.9 % annually compared to 2021. Latvia's cumulative energy saving target in 2030, according to Article 8 of EED, is 29.5 TWh (2.5 Mtoe). To meet the cumulative energy saving target for 2020, both Energy Efficiency Obligation Scheme (included electricity retail sellers) and alternative measures were implemented. For 2021+ period  EEOS is not continued.

Buildings

Total energy consumption in buildings in 2023 was 9.3% lower than in 2010. Consumption in residential buildings had decreased by 12.9% during this period. In contrast, consumption in service sector buildings had decreased only by 1%. Rapid increase in energy prices in 2022 affected energy consumption, which decreased by 5.9% in residential buildings and by 7% in service sector buildings over 2021-2023. 

In 2023, space heating accounted for 66% of household consumption, water heating for 18%, cooking for 8% and electrical appliances and lighting for 9%. Consumption of all types of energy services has decreased compared to 2010. Energy consumption was affected in the long term not only by energy efficiency measures but also by population decline, and in the short term (2021–2023) by fluctuations in energy prices.

Household consumption per m² for space heating decreased by 24% (average 2.1%/year) since 2010, from 15.9 koe/m² to 12.1 koe/m² in 2023, thanks in particular to buildings renovation support programmes. The consumption average value is influenced by several factors partly compensating each other: fuel substitution, higher energy efficiencies due to thermal regulations, changes in heating system (trend to central heating), changes in the share of single and multi-family dwellings and last but not least behavioral factors (e. g. household temperature regulation habits). Behavioral factors played a significant role in energy consumption changes in 2022-2023.

Total energy consumption per dwelling (excluding space heating) was 19% lower in 2023 than in 2010. Over 2010-2023, consumption for water heating decreased by 21%, and consumption for electric appliances decreased by 15%, mainly due to the progressive use of more efficient electrical appliances and bulbs used for lighting. Average value of unit consumption is influenced by several factors partly compensating each other, e.g., dwelling average size, number of people per dwelling, fuel substitution and other factors.

Total electricity consumption per dwelling in 2023 was 45% higher than in 2000. Growth is roughly the same for both end-uses over 2023-2000. Consumption, related to electric appliances, increased significantly until 2010 due to rapid growth in their number, after 2010 it decreased due to progressively use of more efficient appliances and wider use of LED bulbs for lighting. Due to the wider use of district heating system for hot water supply, the consumption for thermal use decreased.

In 2023 final energy consumption of households was 0.31 Mtoe lower than in 2010. On the one hand, two main drivers contributed to increase energy consumption – lifestyle/comfort (larger homes by 0.29 Mtoe), more appliances per dwelling (0.09 Mtoe). On the other hand, energy savings (-0.29 Mtoe) partly compensated the effect of the above-mentioned energy consumption drivers, while climate effects (-0.17 Mtoe), consumer behavior change (-0.24 Mtoe) had additional downward impact.

Over the period 2010-2023, space heating consumption in the residential sector decreased by around 0.23 Mtoe (from 0.91 to 0.69 Mtoe), mainly due to the energy efficiency improvement (- 0.23 Mtoe). The consumption rise linked to the lifestyle/comfort (larger homes) and penetration of central heating amounted to 0.31 Mtoe. Climate effects (-0.17 Mtoe) and consumer behavior change (-0.143 Mtoe) also played significant role in reducing energy consumption for heating.

In 2023 final energy consumption of services sector was less by 8% than in 2015. Trend is driven by main branches with the largest share in total consumption in 2023: private offices (42%), public offices (19%), wholesale and retail (12%). All branches perceived consumption decrease. Thanks to support programmes for state and municipal buildings renovation, the consumption of public offices decreased by around 8%.

Total energy consumption per employee has remained almost unchanged between 2000 and 2023, although electricity consumption per employee has increased sharply by 47%. Though electrical appliances become ever more efficient, rapid increase in their number and ICT diffusion in offices contributed to this growth. Digital solutions introduction to replace employees in certain segments of service sector also affects this indicator.

Buildings is one of the top priorities of national energy efficiency policy, particularly emphasized by Updated NECP2030. Mix of investment support, regulation, information and demonstration measures are used. Significant energy saving is provided by the obligation to implement energy management systems (EMS) in public sector. Thermal engineering of new apartment building envelopes since 1980 is characterized by continuous stringent regulations, resulting in decrease of calculated, based on normative U values, specific energy consumption for heating: 150-200 (1980), 100-130 (1992), 70-90 (2003), 60-85 (2015) kWh/m2/year; the new Construction Standard (in force 2020) incorporates directly the specific energy consumption for heating requirement, 40-60 kWh/m2/year. More than 90% of total floor area of multi-apartment buildings were built before 2003, thus having low energy efficiency. Energy certification of buildings has been introduced in 2013. Recasted Cabinet of Ministers Regulation on Energy Certification of Buildings (2021) states both energy consumption for heating and non-renewable primary energy consumption for particular energy performance classes, also voluntary A+ class is introduced.  From 01.01.2021 (public buildings from 01.01.2019) all construction intentions are nearly zero energy buildings, if economically viable. In December 2020 the Cabinet of Ministers Regulation on minimal energy efficiency requirements of existing buildings has been adopted. 

Transport

In 2023 transport sector total consumption was 4.8% lower than in 2010. Road transport consumption has remained almost unchanged. In 2023, road transport accounts for the largest share (97%) of total consumption and its share has increased by 4 percentage points compared to 2010. In 2023, cars constituted 53% of total road transport consumption, road freight transport 43%. Over the period, the railway share decreased by 4% points. 

Passenger traffic grew by slightly since 2010 (0.1%/year). Traffic by cars increased (0.7%/year) and represented 84% of passenger traffic in 2023. Public transportation decreased by 1.5%/year (buses) and by 3.5%/year (rail). Significantly impacted by COVID-19, public transport recovered in 2023, increasing in passenger-kilometres by 35% for buses and 60% for rail, compared to 2021.

Road represented 56% of total freight traffic in 2023, 38 percentage points more than in 2010. On the other hand, the share of rail decreased strongly. Due to sharp decline in rail freight (8.8%/year), mainly due to a rapid decline since 2020 in transit freight volume, total freight (in tonne-kilometre) showed decrease by 4.3%/year (2010 – 2023). Road freight transport has grown by an average of 4.5% per year during this period.

Over 2010-2023 period, energy consumption of cars per passenger km had decreased by about 1% per year. Several factors influenced this trend. On the one hand, the average number of occupants per trip for cars had decreased over time. In 2023 average number of occupants per trip had decreased by approximately 14% compared to 2017. In addition, a significant portion of passenger cars are medium and large class cars. On the other hand, the average energy efficiency of cars is increasing, replacing existing ones with newer ones, as well as the proportion of electric cars is increasing.

Over the period, energy consumption in the transport sector has decreased by 0.06 Mtoe (0.4%/year), from 1.09 Mtoe to 1.03 Mtoe. The main drivers for the increase are modal shift to road transport for goods and modal shift to passenger cars from public transport (+0.3 Mtoe). This trend was counterbalanced by energy savings (-0.22 Mtoe) and the recession in passenger and freight traffic (-0.08 Mtoe).

NECP 2030 policies promote zero-emission vehicles, both public, commercial and households road transport as well as EMU trains, multi-modality and environmentally friendly public transport infrastructure with railway as central element. Sectorial planning done by the “Transport Sector Development Strategy 2021-2027”. Mix of measures is applied: infrastructure investment, electric vehicles (EV) purchase co-financing, regulations (standards, labelling, public procurement), fiscal, information/education measures. Cars’ and light duty vehicles' annual operational tax based on specific CO2 emission is introduced. EURO class-based taxation is introduced for buses and duty vehicles having gross weight above 3500 kg. The development of EV charging infrastructure in public areas continues. Deployment of EV-charging infrastructure on TEN-T roads is ongoing.

Industry

Total consumption of industry sector increased from 0.77 Mtoe in 2010 to 0.92 Mtoe in 2023 (1.4%/year). Consumption increase was mainly brought about by two branches over 2010-2023: non-metallic minerals by 1.5%/year and wood products (other branches included) by 5.5%/year; the later absorbs 65% of the consumption of manufacturing sector.

Since 2010 final energy consumption in industry increased by 0.15 Mtoe (1.4%/year). The industrial growth (“activity effect”) had a large impact on energy consumption increasing (+0.33 Mtoe). Just over 1/3 of these effects had been offset by energy savings ( -0.127 Mtoe) thanks to technical improvements of the machineries and processes. Structural changes towards less energy-intensive branches caused a reduction 0.108 Mtoe).  

Mix of investment co-financing, regulatory (particularly mandatory implementation of energy audits/energy management systems in large enterprises and large electricity consumers, see the Overview section above), market instruments (particularly EU ETS), information measures are used. Over 2023-2029 period, the energy efficiency investments in the manufacturing industry are co-financed by the Latvia’s Recovery and Resilience Facility Plan and Cohesion Policy Programme for 2021-2027 planning period, including Latvia’s Territorial Just Transition Plan. In turn, state-owned JSC Development Finance Institution ALTUM provides complementary measures.